Manufacturer FAQ

Q: What is Washington’s new electronics recycling law?

A: In 2007, the Washington state legislature passed a statute that requires the collection, transportation, and processing (including recycling) of “covered electronic products” or CEPs throughout Washington State. CEPs are large electronic products (e.g., computers, televisions and computer monitors) that are discarded but that must be recycled, reused or disposed of in an environmentally safe manner. Washington’s new law requires manufacturers to pay for the collection and recycling of CEPs under the new program. The legislature determined that the new program should also encourage manufacturers to design electronic products that are less toxic and more recyclable.

Q: What is the Washington Materials Management and Finance Authority?

A: The Washington Materials Management & Financing Authority is comprised of all manufacturers who sell CEPs in the State of Washington. The “WMMFA” or “Authority” has a governing board made up of manufacturer “members” appointed by the Washington Department of Ecology. Ecology has appointed 11 board members representing a cross-section of the WMMFA membership to serve the current term on the board. The board also includes three advisory non-voting members from Ecology other state agencies. The WMMFA is responsible for developing and implementing a comprehensive plan to collect, transport, process and recycle all discarded CEPs in the state. This plan is called the “Standard Plan” for the program and must be approved by Ecology before it may be implemented by the Authority.

Q: Who will pay for the costs of the WMMFA program?

A: The member manufacturers will pay the costs of implementing the WMMFA Standard Plan. Initially, Ecology collected fees from manufacturers based upon market size to cover the startup and administrative costs of the program, including Ecology member registration, return share sampling and other review obligations of the agency. The WMMFA will begin collection of fees from member manufacturers in April 2008 to finance and implement the Standard Plan beginning on January 1, 2009.

Q: When will operations under the WMMFA Standard Plan program begin?

A: The WMMFA CEP recycling plan must provide a comprehensive program for the collection, transportation, processing, and recycling of CEPs from all “covered entities” in Washington State. The WMMFA draft plan was submitted to Ecology for review and approval on February 1, 2008. The WMMFA expects the plan will be approved by late 2008. Formal operations under the WMMFA plan will begin January 1, 2009.

Q: What is the WMMFA doing to ensure returned and discarded CEPs will not be shipped into 3rd world countries and pose a risk to human health and the environment?

A: WMMFA has adopted the Preferred Processor Standards set forth in WAC-173-900-650. These standards require that each processor/recycler that participates in the WMMFA Standard Plan will ensures that shipments of CEPs will be managed in an environmentally sound manner and that each transit and recipient country accepts such imports. Processors will be required to document this assurance. For a complete description of the downstream auditing an exporting standards visit the WMMFA website at www.wmmfa.net and view the document Environmentally Sound Management and Performance Standards for Direct Processors at the “Preferred Performance Standards” link.

Q: How does the WMMFA intend to use existing recycling and collection infrastructure in Washington to handle CEPs?

A: The operational aspects of the Standard Plan are designed around the use of existing infrastructure in the state wherever and whenever possible. Capacity to handle the collection, transportation, and processing of the additional volumes expected when the plan is operational will be addressed by a combination of free market forces and environmental stewardship, to ensure compliance with the laws at a reasonable cost to manufacturers paying for the plan operations.

Q: How might the differences among state electronic waste recycling laws impact what WMMFA is doing in Washington State:

A: Legislation to address recycling of electronic waste has been and continues to be discussed at the federal level, although the WMMFA does not believe specific national legislation is pending at this time. In the meantime, the states will continue to develop their own laws in this area, which may or may not resemble Washington’s new law.

Q: As a manufacturer that sells electronics in Washington, do I have to participate in the WMMFA program?

A: Only manufacturers who sell CEPs in Washington are subject to the new Washington electronics recycling law and regulations. A manufacturer of CEPs that sells its products in Washington must participate in the WMMFA Standard Plan unless the manufacturer has received Ecology approval to participate in an “independent plan.” A single manufacturer or a group of manufacturers may submit an independent plan to Ecology for approval if they, individually or as a group, represent at least five percent of the CEPs sold in the state. Other requirements for independent plans are outlined in WAC-173-900-310.

Q: How will a manufacturer’s individual financial obligation to the WMMFA for operation of the Standard Plan be determined?

A: The WMMFA is responsible for development of a financing plan to support the Standard Plan operations and the administrative costs to support the WMMFA. The WMMFA board has determined an equitable financing structure that will consider sampling data of CEPs returned (not yet available), which sampling will be performed by a third party observer. The sampling will identify brand names, type of CEP (TV, Monitor, Laptop, PC), number of CEPs by product type, weight (in pounds) of CEPs identified with each brand name, weight of CEPs that lack a manufacturer’s brand, and the total weight of the sample. Until data, based on sampling from actual collections is available, the WMMFA must rely upon a combination of available manufacturer “market share” data and “return share” data developed by Ecology survey to determine individual manufacturer’s share of program costs. Further details are available at the WMMFA web site in the financing newsletter.

Q: Why did the WMMFA borrow money from Ecology? Why do manufacturers have to repay Ecology for the WMMFA loan?

A: Ecology’s loan to the WMMFA was needed to cover the initial costs of organizing the WMMFA and its governing board as a quasi-governmental agency and the costs incurred to develop the Standard Plan for financing and operating the collection, transporting and processing of CEPs in accordance with the new electronics recycling law and regulations.

Q: Why is the WMMFA moving toward “market share” as the primary basis for cost allocation among manufacturers in the Standard Plan rather than return share or a combination of both market share and return share?

A: In the beginning, the WMMFA will use a combination of market share and return share to calculate a manufacturer’s share of WMMFA costs. Thus, at this time and for the next seven years, use of return share will be necessary and will require allocating the added cost of collecting, transporting and processing “orphan CEPs” (CEPs that cannot be attributed to a member manufacturer) to WMMFA members. However, the WMMFA believes that a cost allocation based upon market share will ultimately establish a more inclusive, level playing field for all manufacturers participating in the market; and will provide pollution prevention incentives for manufacturers to reduce weight of their products sold in the market. The initial hybrid approach will allow companies with an existing high market share and low return share to participate in the Plan with less financial burden than they would have starting in a system financed solely on market share. Thus, the program provides some time for the return share of such company-branded products to normalize in the direction of market share. The market share/return share hybrid approach should provide the most equitable and forward – looking allocation system for Authority members. We anticipate future analytical tools will be developed for member allocation and take into consideration such things as product categories and product life-spans.

Q: What kind of CEP volumes does the WMMFA anticipate once operation of the Standard Plan begins? What is
the estimated cost for 2009 operation of the Standard Plan?

A: The authority originally anticipated 24,000,000 pounds of CEPs to be collected under the Standard Plan in 2009. On April 17th the board revised its’ estimate based on input and recent experience with other plans. The estimate now stands at approximately 19,500,000 pounds. The WMMFA has not yet negotiated rates with collectors, transporters, or processor/recyclers. Based on current rate information available, the WMMFA is budgeting administrative and operational expenses of between 6.5 and 9 million dollars for 2009. The WMMFA has established guidelines that will provide for “fair compensation” to our service providers. However, as the WMMFA learns more about what services will be required in the initial year of operations, budgeted cost estimates could change.

Q: How often will the WMMFA invoice costs to member manufacturers?

A: Quarterly. WMMFA will invoice members based on anticipated actual expenses. The WMMFA has not accounted for a savings or rainy day fund component within the financing plan. Under the law, the WMMFA must maintain a 20% reserve amount within budget to allow for operational contingencies. It is the goal of the WMMFA to keep invoiced amounts equal to actual costs to avoid the added interest expense associated with securing short term loans.

Q: Are there penalties fora member’s late or nonpayment?

A: Ecology is responsible for any enforcement action under the new law, which could include enforcement and penalties assessed against members who fail to pay their fairshare of the costs of the WMMFA Standard Plan operations. Compliance and enforcement for violations of the Ecology-approved Standard Plan are outlined in Chapter 173-900 Washington Administrative Code. Applicable provisions of the Code may be accessed at Ecology’s web site.

If you have additional questions regarding the WMMFA or the Standard Plan as proposed, please contact us.